FINANCE  AND  TAXATION 


SPEECH 

OF 

HON.  SIDNEY  CLARKE, 

OF  KANSAS, 

IN  THE  HOUSE  OF  REPRESENTATIVES,  MARCH  7,  1868. 


Mr.  CLARKE,  of  Kansas.  Mr.  Speaker, 
if  we  except  ihe  absorbing  topic  of  the  im¬ 
peachment  of  an  unfaithful  Chief  Magistrate 
and  of  political  reconstruction,  no  question 
presents  at  this  hour  such  vital  importance  as 
th6  financial  condition  of  the  country.  With 
the  vast  burden  of  taxation,  business  depres¬ 
sion,  and  disaster  which  have  been  forced  upon 
ihe  country  by  a  policy  either  corrupt  or  fool¬ 
ish.  and,  perhaps,  combining  both  elements, 
it  is  no  wonder  that  a  large  number  of  those 
who  have  always  been  associated  with  the 
national  party  should  be  growing  restless  and 
uneasy.  Nor  is  it  unnatural  that  everywhere 
men  are  found  almost  willing  to  ignore  the 
fundamental  political  necessity  of  the  land — 
that  which  demands  the  establishment  of  equal 
and  exact  justice  for  all  before  the  law — at  the 
instigation  of  democratic  demagogues,  who 
seek  adroitly  to  use  the  burden  of  taxation,  for 
which  that  party  is  alone  responsible,  and  join 
in  a  raid  against  those  with  whom  they  have 
affiliated  in  a  vain  attempt  to  better  the  finan¬ 
cial  condition  of  individuals  and  of  commu¬ 
nities.  It  is,  therefore,  both  from  principle 
and  from  policy  that  those  who  comprise  the 
majority  .should  not  only  face  this  problem 
but  solve  it.  Surely,,  sir,  the  statesmen  under 
whose  leadership  a  great  war  was  conducted, 
who  have  stood  here  battling  with  treachery  of 
the  most  heinous  character,  cowardice  of  the 
most  embarrassing  kind,  and  a  defiant  spirit 
which  everywhere  has  made  itself  felt  inju¬ 
riously,  are  able  to  properly  meet  this  and  all 
other  issues.  I  deny  to  the  party  which  opposed 
the  war,  after  having  in  great  part  caused  its 
horrors,  and  who  have  been  and  are  now  sys¬ 
tematically  seeking  to  prevent  a  peaceful  res¬ 
toration  of  the  Union,  either  the  capacity  or 
the  patriotism  necessary  to  manage  the  finan¬ 
cial  a  (fairs  of  this  nation  in  theinterestsofsonnd 
economy  and  active  loyalty.  The  financial 
restoration  we  seek  to  attain  must  lie  reached 
through  the  great  loyal  sentiment  of  the  coun¬ 
try  which  upheld  the  banners  of  the  Repub¬ 


lic  through  the  fearful  contest  for  our  nation¬ 
ality.  And  let  me  remind  gentlemen  repre¬ 
senting  the  dominant  party  upon  this  iloor 
that  it  seems  to  me  to'  be  far  from  the  pub¬ 
lic  interests  to  engage  in  mutual  denunciation 
of  each  other  because  there  is  a  difference 
of  opinion  as  to  the  methods  by  which  results 
are  to  be  achieved. 

Sir,  1  represent  a  State  not  in  the  far  West, 
but  in  the  interior  of  the  continent,  and  where 
no  favored  classes  are  recognized  by  the  masses 
of  the  people;  and  because  I  differ  with  the 
gentleman  from  Maine,  [Mr.  Blaine,]  who 
opened  this  discussion,  and  who,  from  the  tone’ 
of  his  speech,  seemed  to  speak  in  the  interests 
of  the  bondholders  and  the  rich  as  against 
the  rights  and  necessities  of  the  poor,  I  do 
not  admit  his  right  to  number  me  with  the  men 
who  would  tarnish  the  honor  of  the  country 
by  any  species  of  repudiation  because  1  see 
fit  to  stand  by  the  letter  and  spirit  of  the  law 
in  the  liquidation  of  our  national  securities. 
Having  said  this  much  by  way  of  introduction, 

T  proceed  to  the  discussion  of  ihe  financial 
situation  and  of  the  difficulties  by  which  the 
question  is  surrounded. 

now  THE  MONEY  LENDERS  CONTROL. 

Mr.  Speaker,  the  country  needs  immediate 
relief.  When  the  war  closed  the  loyal  Stales 
were  in  a  state  of  great  prosperity.  Business 
activity  everywhere  prevailed.  During  the  war 
we  had  been  compelled  to  abandon  the  general 
system  of  credit  which  had  previously  existed. 
This  fact  is  not  taken  into  account  by  those 
who  now  advocate  contraction  and  immediate 
resumption. 

We  are  constantly  informed  of  the  amount 
and  volume  of  the  circulating  medium  which 
then  existed.  But  we  are  not  informed  of  the 
large  amount  of  business  that  was  transacted 
upon  individual  “  promise  to  pay.”  Of  ibis  kind 
of  paper,  representing  large  transactions  in 
trade,  commerce,  and  all  kinds  of  business, 
there  was  probably  not  le-;s  than  a  thousand 
million  dollars  in  use.  Credit  accepts  such 


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a  circulation.  Cash  ignores  it  entirely.  Conse¬ 
quently  the  change  in  our  mode  of  doing  busi¬ 
ness  wiped  all  this  out  of  existence,  and  in 
doing  so  it  created  a  necessity  for  a  much 
larger  volume  of  money  as  a  circulating  me¬ 
dium  of  trade. 

Before  the  war  business  men  with  good  secur¬ 
ities  to  offer  found  no  difficulty  in  obtaining  ad¬ 
vances.  Banks  and  money  lenders  were  not  then 
able,  by  means  of  a  diminished  currency,  the 
abrogation  of  credit,  and  ageneral  trafficin  Gov¬ 
ernment  bonds,  to  dictate  such  extraordinary 
rates  of  interest  as  virtually  to  stop  all  business 
of  an  enterprising  or  speculative  character. 
We  have  about  seven  hundred  million  dollars  of 
paper  money  in  circulation,  no  coin,  except  on 
the  Pacific  coast  and  in  Texas,  perhaps,  and 
no  credit.  Government  securities  give  to  the 
holder  and  the  dealer  in  them  from  nine  to 
twelve  per  cent.,  estimating  interest  in  green¬ 
backs.  State  usury  laws  forbid  payment  of 
interest  over  a  certain  per  cent.  Massachusetts 
says  six  ;  New  York  seven.  Everybody  who 
deals  in  money  finds  “  Governments5’  the  most 
profitable  thing  in  which  to  traffic. 

Sir,  the  larger  portion  of  the  national  bank 
circulation  is  in  the  commercial  States;  so 
with  the  balance  of  “  legal  tender”  still  afloat. 
Commercial  centers,  it  is  notorious,  do  not 
require  by  one  half  as  much  circulating  medium 
to  carry  on  their  great  operations  as  more 
sparsely  settled  regions  and  new  States  do  for 
their  not  as  heavy  transactions.  Actual  money 
is  needed  in  the  latter ;  in  the  former  one 
piece  of  paper  may  represent  during  the  day 
many  times  its  value.  So,  with  the  Government 
securities  to  crush  out  the  borrowers,  thus  stag¬ 
nating  enterprise,  and  with  so  limited  an 
amount  of  money  or  its  representative  in  cir¬ 
culation  that  the  money-changing  and  lend¬ 
ing  class  can  control  it  nearly  all,  there  can 
be  no  wonder  that  over  a  million  of  laboriug 
men,  North  and  South,  should  be  out  of  em¬ 
ployment. 

WHO  IS  RESPONSIBLE  FOR  FINANCIAL  DISASTER? 

It  is  not  to  be  wondered  at  that  these  causes 
have  not  only  provoked  wide-spread  dissatis¬ 
faction  with  the  great  party  to  which  I  belong — 
unjustly  so  as  1  think — but  they  daily  rob  the 
country  of  great  wealth  and  so  destroy  the 
nation’s  ability  to  pay  the  debt  which  a  Demo¬ 
cratic  war  fastened  upon  us.  I  said,  Mr. 
Speaker,  the  Republican  party  is  not  now  re¬ 
sponsible  for  present  financial  disaster  any 
more  than  it  is  responsible  for  the  great  polit¬ 
ical  treachery  from  the  evil  effects  of  which 
we  are  suffering.  It  will,  however,  be  respon¬ 
sible  if,  knowing  the  evil,  it  fails  to  apply  a 
remedy.  It  would  have  been  the  part  of  wis¬ 
dom,  it  seems  to  plain  common  sense  men,  to 
have  given  the  business  needs  of  the  South 
and  West  the  great  advantange  of  an  abun¬ 
dant,  not  a  redundant  currency. 

The  reverse  has  been  the  case.  Every  dollar 
oflegal  tender  which  could  legitimately  have 
been  absorbed  in  the  South  would  have  been 


as  potent,  and  even  more  so,  in  fostering  ac* 
quiescence  and  renewed  loyalty  as  our  bullets 
and  bayonets  were  in  subduing  rebellion.  The 
confederacy,  during  the  last  two  years  of  its 
existence,  was  maintained  chiefly  by  the  des¬ 
perate  endeavors  of  a  people,  who,  having 
been  cunningly  involved,  were  simply  fighting 
in  the  vain  hope  of  saving  themselves  from 
financial  ruin  which  defeat  was  sure  to  bring. 
Every  confederate  note  represented  far  more 
than  even  its  nominal  value.  It  represented 
its  portion  of  a  life’s  struggle  for  pecuniary 
independence,  with  all  the  hopes  and  ambi¬ 
tions  which  cluster  around  such  an  endeavor. 
When  the  war  ended  the  entire  circulating 
medium  of  the  rebels  was  blotted  out  of  ex¬ 
istence.  Did  we  wisely  endeavour  to  replace 
it?  Not  at  all.  On  the  contrary  under  the  San- 
grado  system  of  Mr.  McCulloch,  we  have  been 
most  actively  engaged  in  draining  the  loyal 
States  of  their  currency,  and  in  refusing  to 
give  any  to  the  South.  We  have  not  only  shut 
off  a  much  needed  supply  for  the  South  and 
West,  but  carried  out  a  system  of  contraction 
which  has  brought  us  near  to  general  panic 
and  bankruptcy. 

There  can  be  but  little  doubt  that  the  pres¬ 
ent  distress  is  caused  entirely  by  the  policy  of 
contraction  pursued  by  the  Secretary,  com¬ 
bined  with  a  burdensome  system  of  internal 
taxation  and  the  terrible  fears  which  the  polit¬ 
ical  treachery  of  this  infamous  Administration 
have  given  rise  to.  Let  me,  as  simply  as  I 
may,  present  the  actual  facts  in  relation  to 
this  policy  of  contraction,  upon  which  Con¬ 
gress  so  recently  set  a  seal  of  condemnation. 

THE  NATIONAL  DEBT  AND  ITS  MISMANAGEMENT. 

In  August,  1865,  the  public  debt  reached  its 
highest  point,  and  was  made  up  as  follows: 


Funded  debt . S1.109.5SS.191  8!) 

Matured  debt .  1,503,020  09 

Temporary  loans .  107.l-18.7i3  IS 

Certificates  of  indebtedness .  8-3.093.000  00 

Five  percent,  legal-tender  notes .  33,951.230  00 

Compoundinterestlegal-tendernotes.  217,021.1(30  00 

Seven-thirty  notes .  830,000,000  00 

United  States  notes,  (legal  tenders)...  433,160,509  00 
Fractional  currency .  26,344,742  51 


Suspended  requisitions  uncalled  for...  2,111,000  00 


Total . $2,815,907,626  56 

Deduct  cash  in  Treasury...*. .  83,218,053  13 


Balance 


$2,757,689,571  43 


Of  these  obligations,  it  will  be  noticed, 
$684,138,959  were  a  legal  tender,  to  wit: 


United  States  notes . :.$433, 160,569  00 

Five  per  cent,  notes .  33.954,230  00 

Compound-interest  notes .  217,024,160  09 


Total . $684,138,959  00 


There  were  other  items  which  amounted  to 
over  $30,000,000,  and  swelled  the  totai  vol¬ 
ume  of  circulation  to  about  $720,000,000.  If 
we  estimated  the  then  value  of  the  property 
and  wealth  of  the  Union  as  about  $20,000,- 
000.000,  and  allowed  a  margin  of  teu  per  cent. 


3 


on  this,  as  the  amount  necessary  for  moving 
the  ordinary  business  interests  of  the  country, 
avc  should  have  required  a  circulating  medium 
of  about  $2,000,000,000.  Yet  Ave  had  less  than 
half  this  sum,  with  the  extraordinary  demands 
presented  by  the  condition  of  the  South  and  the 
rapid  development  of  the  West,  consequent 
upon  the  activity  of  the  country  being  turned 
in  that  direction.  What  course  was  pursued 
by  the  head  of  the  Treasury  Department? 
Within  twenty- one  months  Mr.  McCulloch  has 
succeeded  in  reducing  the  volume  of  currency 
from  $720,000,000  to  $570,000,000,  a  reduc¬ 
tion  of  $150,0o0,000.  At  the  same  time  he 
has  paid  considerably  over  $400,000,000  of 
the  national  debt.  It  Avould  appear  as  if  this 
financial  management  Avas  part  and  parcel  of 
the  administrative  and  executive  policy  that 
seems  to  have  been  cunningly  designed  for  no 
other  purpose  than  national  destruction. 

HOW  THE  SECRETARY  FUNDS  THE  DEBT. 

Mr.  McCulloch  tells  us  in  his  report  that  his 
object  has  been  to  convert  interest-bearing 
notes,  temporary  loans,  and  the  bonds  which 
Avere  distinctly  to  be  paid  in  “legal  tender,” 
into  gold-bearing  bonds  and  to  contract  tho 
paper  circulation  by  the  redemption  of  United 
IStates  notes.  “This  policy,”  the  Secretary 
says,  “  he  has  pursued  to  his  own  satisfaction  ; 
and,”  as  he  believes,  “to  that  of  a  large  ma¬ 
jority  of  the  people.”  Of  the  first  portion  of 
the  statement  there  can  be  no  doubt.  Mr.  Mc¬ 
Culloch  is  not  a  gentleman  who  will  be  likely  to 
lose  faith  in  his  own  Avisdom  and  capacity. 
But  the  latter  portion  required  a  larger  amount 
of  egotism  to  make  than  did  even  the  utter¬ 
ance  of  that  remarkable  harangue  in  which  this 
financier  stigmatized  the  Thirty-Ninth  Congress 
as  a  “tinkering  Congress.”  Sir,  the  restora¬ 
tion  of  rebels  to  power  as  the  aim  of  the  White 
House,  and  the  destruction  of  the  national 
prosperity  as  the  chief  result  of  financial  mis¬ 
management,  are  strands  in  a  terrible  rope 
twined  by  this  Administration  for  the  nation’s 
strangulation.  The  Secretary  makes  this  ex¬ 
hibit.  of  the  results  of  his  policy  of  contraction 
and  funding: 

“  Since  the  first  day  of  September,  1865,  the  tempo¬ 
rary  loans,  the  certificates  of  indebtedness,  and  the 
five  per  cent,  notes  have  all  been  paid,  (with  the  ex¬ 
ception  of  small  amounts  of  each  not  presented  tor 
payment,)  the  compound-interest  notes  have  been 
reduced  from  $-17,024,160  to  $71,875,040,  ($11,560,000 
having  been  taken  up  with  three  per  cent,  certifi¬ 
cates;)  l ho  seven  and  thrcc-tcnth  notes  from  $830,- 
000,000  to  $337,078,800:  the  United  Stntcs  notes,  includ¬ 
ing  fractional  currency,  from  $450,505,311  51  to  $387,- 
871,477  30 — wiiitc  the  cash  in  the  Treasury  lias  b‘*en 
increase  l  from  $88,218,055  13  to  $133,998,308  02,  and 
the  funded  debt  has  been  increased  $636,534,800.” 

PRESENT  RESUMPTION  OF  SPECIE  PAYMENTS 
IMPOSSIBLE. 

That  is  to  say,  we  are  now  paying  in  gold  an 
annual  interest  amounting  to  $37,410,238 — 
equivalent  to  nearly  fifty  millions  in  greenbacks 
— more  than  we  would  have  done  had  not  this 
policy  been  pursued.  It  certainly  involves  no 
extraordinary  amount  of  financial  skill  to  sell 
six  per  cent,  gold  bonds,  and  seven-thirty  cur¬ 


rency  notes.  Neither  does  the  buying  of  five 
per  cent,  compound  interest  notes,  and  the 
putting  out,  of  six  per  cent,  gold  bonds  require 
much  ability.  It  is  a  paying  business  for  the 
holders  of  the  currency  debt — the  national 
banks,  speculators,  money  brokers  of  the  trad¬ 
ing  and  commercial  centers;  but  it  is  an  ex¬ 
pensive  and  losing  operation  for  tli/e  Govern- 
mentand  tliepeople.  in  short,  Mr.  McCulloch 
is  putting  this  portion  of  the  national  debt  into 
such  shape  that  the  interest  is  being  largely 
increased,  while  it  is  absolutely  necessary  that 
the  taxes  shall  be  lessened,  and  as  a  necessary 
result  the  revenue  be  largely  reduced.  Jn  the 
face  of  all  this,  the  Secretary  desires  to  contract 
the  currency  to  an  extent  that  will  enable  him 
to  resume  specie  payments  on  the  first  of  Jan¬ 
uary,  1869.  We  Avould  then  have  a  debt  bear¬ 
ing  six  per  cent,  interest,  in  gold,  of  $2,400,- 
000,000,  and  a  debt  bearing  live  per  cent,  of 
$205,000,000,  calling  for  an  annual  interest  of 
$151,000,O0O.  Add  to  this  $150,000,000  more 
to  pay  the  expenses  of  the  Government,  and 
we  have  over  three  hundred  millions  a  year  to 
meet,  with  a  currency,  coin  and  paper,  of 
about  live  hundred  millions.  Our  income  from 
customs,  with  even  l  lie  present  high  tariff,  can¬ 
not  be  safely  calculated  at  over  one  hundred 
millions.  This  would  leave  $200,000,000  to  be 
obtained  from  a  system  of  internal  taxes.  And 
if  t he  people,  with  $750, 000, OOOof  paper  money, 
cry  out  against  the  present  tax,  what  may  be 
expected  when  they  shall  be  called  on  for 
$200,000,000  a  year  in  gold,  and  that,  too,  in 
t  he  midst  of  the  distress  Avhich  will  be  expe¬ 
rienced  if  Ave  hurry  prematurely  to  specie  pay¬ 
ment? 

THE  SECRETARY'S  POLICY. 

Mr.  Speaker,  I  have  no  idea,  however  desir¬ 
able  it  may  be,  that  we  are  in  any  sense  pre¬ 
pared  for  such  a  resumption.  For  myself,  sir, 
l  atn  not  impressed  with  its  necessity.  Mr. 
McCulloch’s  (and  the  hanking  and  money- 
broker  interests  lie  represents)  general  policy 
seems  to  include — 

First.  The  funding  or  payment  of  the  bal¬ 
ance  of  interest-bearing  notes  and  a  continued 
contraction  of  the  paper  currency. 

Second.  The  payment  of  the  public  debt  in 
gold,  or,  as  he  chooses  to  term  it,  “  the  main¬ 
tenance  of  the  public  faith.” 

Third.  The  collection  in  the  Treasury  of  a 
large  amount  of  gold,  as  a  means  of  paying  off 
the  non-interest-bearing  notes. 

Fourth.  The  liquidation  of  the  debt  by  a 
large  annual  payment,  which  will  extinguish 
it  in  the  course  of  a  short  period  of  time. 

Fifth.  The  issue  of  bonds, «to  be  known  as 
the  consolidated  debt  of  the  United  States, 
bearing  six  per  cent,  interest,  and  having 
twenty  years  to  run,  into  Avhicli  all  other  obli¬ 
gations  of  the  Government  shall,  as  rapidly  as 
possible,  be  converted  ;  one  sixth  part  of  the 
interest  at  each  semi-annual  payment  to  be 
reserved  by  the  Government  in  lieu  of  taxes, 
or  paid  over  to  the  States  according  to  their 


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population,  as  a  means  of  return  to  the  pay¬ 
ment  of  specie. 

THE  SITUATION. 

On  the  other  hand,  the  financial  situation 
may  be  thus  briefly  presented  : 

1.  A  national  debt  of  $2,600,000,000,  of 
which  a  little  more  than  $375,000,000  are 
greenbacks  and  fractional  currency,  and  $2,- 
000,000,000  are,  or  soon  will  be  if  the  present 
policy  prevails  bonds  bearing  gold  interest, 
mostly  at  six  per  cent. 

2.  A  national  bank  currency  limited  to 
$300,000,000. 

3.  A  high  tariff,  the  duties  under  which,  pay¬ 
able  in  gold,  are  estimated  at  about  thirty  per 
cent,  of  the  invoice  prices  of  the  goods.  These 
duties,  so  far  as  needed,  are  pledged  to  pay  the 
gold  interest  on  the  funded  debt. 

4.  An  elaborate  system  of  internal  revenue 
taxation,  from  which  but  few  of  our  industries 
and  only  our  humblest  incomes  are  exempt, 
and  the  proceeds  of  which  (currency)  are  de¬ 
signed  to  meet  the  general  expenses  of  the 
Government. 

5.  An  available  balance  in  the  Treasury  of 
abouttwenty  million  dollars  currency  and  eighty 
millions  gold  after  paying  the  interest  on  debt 
up  to  January  1  of  the  present  year. 

CONTRACTION  A  FAILURE. 

Sir,  this  Congress  has  already  closed  the 
contraction  account.  The  changing  of  the 
debt  payable  only  in  greenbacks  into  bonds, 
payable,  according  to  the  interpretation  of  the 
bondholders  and  this  Secretary — so  facile  in 
their  hands — in  gold  alone,  has  already  re¬ 
ceived  the  general  condemnation  of  the  coun¬ 
try.  It  benefits  no  one  except  the  banker  and 
speculator.  It  cheats  the  industry  of  the 
country  by  draining  its  resources,  through  ex¬ 
cessive  taxation,  into  the  hands  of  the  non¬ 
producing  classes. 

Mr.  Speaker,  a  great  deal  is  said  about  a 
“redundant”  and  an  “inflated  currency,” 
whenever  men  talk  about  the  necessities  of 
business,  the  demands  of  enterprise,  and  the 
depression  of  all  industries  by  the  system  now 
being  pursued.  I  have  endeavored  to  show 
liow  largely  the  whole  volume  of  currency  and 
coin  in  circulation  is  below  the  most  moderate 
per  cent,  needed  to  move  forward  the  business 
of  the  country.  Let  us  look  at  the  amount  of 
the  currency  debt,  as  shown  by  a  late  exhibit 
of  the  Secretary  of  the  Treasury: 


Six  per  cent,  bonds .  $18,601,000 

Compound  notes  (live  per  cent.) .  62,249,360 

Seven-thirty  notes  . .  285,587,100 

Three  per  cent,  certificates .  12,855,000 

Matured  debt,  not  presented  lor  pay¬ 
ment . a .  14,178,363 

Greenbacks .  356,212,473 

Fractional  currency .  30,929,984 


Total .  $780,604,280 


Of  this  amount  the  greenbacks  and  frac¬ 
tional  currency,  amounting  to  $387,142,457, 
only  need  to  be  let  alone  ;  and  holders  of  com¬ 
pound-interest  notes  which  bear  five  per  cent. 


interest  can  profitably  exchange  them  for  three 
per  cent,  certificates,  the  latter  being  preferred 
by  the  banks. 

PAYING  THE  DEBT  DURING  THIS  GENERATION. 

Another  item  in  Mr.  McCulloch’s  plan  is 
the  collection  of  large  gold  reserves  wherewith 
to  pay  off  the  legal  tenders  and  other  non-in¬ 
terest-bearing  notes.  Of  that  policy  we  have 
certainly  had  sufficient,  or  what  might  be  more 
truly  said  none,  for  the  gold  collected  by  the 
department  has  been  mainly  used  for  the  bene¬ 
fit  of  the  “Bulls  and  Bears”  of  Wall  street. 
The  Treasury  has  long  enough  served  as  the 
gold  brokers’  exchange.  The  system  pursued 
hitherto  has  only  succeeded  in  disordering  all 
values,  and  it  has  only  benefited  the  fortunate 
few  who,  being  within  the  ring,  would  know 
when  the  Secretary  was  intending  to  sell. 

Secretary  McCulloch  desires  to  liquidate  the 
debt  within  this  generation.  That  is  the  plain, 
matter-of-fact  statement  of  this  scheme  for  ac¬ 
cumulating  large  amounts  to  make  annual 
deductions  therefrom.  I  have  no  desire,  Mr. 
Speaker,  to  do  any  such  thing.  We  have 
borne  the  burden  of  the  terrible  struggle.  We 
have  given  our  best  beloved  to  the  sacrifice. 
The  land  swells  with  the  graves  of  the  dead 
who  died  for  man.  Wealthy  money  lenders 
secured  a  bonus  of  $800,000,000  profit  on  what 
they  advanced  the  nation  by  payment  of  it  in 
a  currency  whose  deterioration  was  secured  by 
their  own  operations.  We  wrote  our  own  cur¬ 
rency  below  par  at  their  demands.  We  declared 
that  the  interest  should  be  paid  in  gold,  while 
the  soldier  who  faced  death  as  he  went  to  the 
field  was  paid  his  scant  wages  in  greenbacks, 
for  the  redemption  of  which  all  the  values  in 
the  nation  were  pledged.  Perhaps  we  could 
do  no  better.  But  I  demand  for  the  people 
that  those  who  drove  hard  bargains  out  of 
their  necessities  should  receive  only  the  letter 
of  their  bonds.  Let  us  equalize  the  burden. 
Put  the  larger  share  on  that  future  which  is  to 
be  so  much  benefited  by  our  past  and  present 
toil  and  sacrifice. 

THE  LETTER  OF  THE  BOND— NO  MORE. 

The  letter  of  the  bond — that  is  all  the  people 
require;  that  is  all  they  will  give.  The  party 
which  tries  to  do  more  in  the  interests  only  of 
the  money-lender  will  go  to  the  wall.  What  is 
the  letter  of  the  bond?  The  act  of  February 
25,  1862,  by  which  the  first  $150,000,000  of 
legal-tender  notes  were  issued,  says  in  these 
words: 

“And  such  notes,  herein  authorized,  shall  be  receiv¬ 
able  in  payment  of  all  taxes,  internal  duties,  excises, 
debts,  and  demands  of  every  kind  due  to  the  United 
States,  except  duties  on  imports,  and  for  all  claims 
and  demands  against  the  United  States  of  every  kind 
whatsoever,  except  for  interest  upon  bonds  and  notes 
which  shall  be  paid  in  coin  ;  and  shall  also  be  lawful 
money  and  a  legal  tender  in  payment  of  all  debts, 
public  and  private,  within  the  United  States,  except 
duties  on  imports  and  interests  as  aforesaid.” 

“A  lawful  money”  was  thus  created  in  which 
every  debt  could  be  liquidated,  except  interest 
upon  bonds  or  duties  on  imports.  The  second 
section  of  the  same  act  provides  for  issuing 


5 


$500,000,000  of  registered  bonds — those  known 
now  as  five-twenties.  How  were  they  to  be 
paid?  Here  are  the  words  of  the  law,  and  I  do 
not  find  a  line  as  to  the  money  in  which  the 
principal  shall  be  paid  other  than  the  lav/ful 
money  previously  authorized: 

“These  coupon  bonds  are  to  be  issued  to  an  amount 
not  exceeding  $500,000,000,  payable  in  twenty  years 
from  date,  and  bearing  a  rate  of  six  per  cent.,  paya¬ 
ble  semi-annually.  ” 

The  first  section  creates  a  “lawful  money,” 
making  it  a  legal  tender  for  all  debts  except 
interest  and  import  duties.  Why,  then,  under¬ 
take  to  force  the  law  to  another  meaning? 
No,  Messrs.  Creditors,  we  stand  on  the  plain 
intent  and  letter  of  the  law.  We  should  be 
greatly  wronged  if  any  other  rule  was  followed. 
The  bondholders  who  hold  these  five-twenties 
have  already  grown  wide  on  their  investment 
in  the  shape  of  freedom  from  taxation,  premium 
in  the  gold  paid  for  interest,  and  especially  in 
the  fact  that  they  seldom  paid  more  than  forty 
per  cent,  for  their  bonds. 

WHAT  WE  REALLY  NEED— A  FIFTY-YEAR  CONSOL. 

Mr.  Speaker,  a  great  deal  of  talk  is  had 
about  speedy  payment  of  national  indebted¬ 
ness.  What  we  really  need  to  do  in  the  first 
place  is  to  secure  to  the  industrial  needs  of  the 
land  a  stable  circulating  medium — enough  in 
volume  to  move  business  forward,  and  so  earn 
the  means  by  which  it  must  eventually  be  paid. 
That  “medium”  is  not  to  be  found  in  gold, 
yearly  becoming  more  and  more  an  article  of 
trade,  and  having  no  intrinsic  value  outside  of 
art  and  mechanics  but  what  an  arbitrary  rule 
imposes.  Gold  may  be  used  as  the  standard 
of  value,  but  must  not  be  made  the  currency 
itself.  We  need  a  circulating  medium  abun¬ 
dant  and  uniform,  having  the  confidence  of  the 
people,  and  not  one  which  renders  us  tributary 
to  monarchical  Europe  and  leaves  our  property 
to  be  reduced  in  value  every  time  Bismarck’s, 
Napoleon’s,  or  Alexander’s  ambition  may  let 
slip  the  dogs  of  war.  Such  a  medium  we  had 
in  our  “greenbacks.” 

The  next  step  is  to  take  the  United  States 
securities  out  of  the  market  as  matters  of  trade 
and  make  of  them  a  matter  of  investment. 
The  proper  position  of  Government  securities 
in  the  money  market  should  be  that  of  stable 
investment,  and  not  of  daily  barter.  We  pay 
by  far  too  large  an  interest.  The  interest  rate 
might  not  have  been  too  great  when  the  risks 
of  war  were  considered,  but  certainly  with  the 
assured  stability  victory  brought  and  the  grand 
material  development  opening  before  us  we 
can  command  on  a  funded  debt  much  more 
reasonable  terms  than  those  now  paid.  Let  us 
fund  bonds  into  a  fifty  year  consol,  at  the  rate 
of  8.65  per  cent.,  a  rate  convenient  for  its  easy 
calculation,  giving,  as  it  would,  one  cent  per  day 
on  every  hundred  dollars.  Let  the  five  twenties, 
which  are  to  be  paid  by  the  terms  of  the  law  in 
“  lawful  money,”  be  paid  as  they  mature  in 
the  money  nominated  in  the  bond,  or  give  the 
bondholder  the  choice  of  receiving  the  fifty 


years'  bond,  bearing  the  beforenamed  interest. 
So,  as  other  forms  of  bonds  fall  due,  let  them 
be  transferred  in  the  same  way.  In  this  way 
there  could  be  a  simple  and  economical  fund¬ 
ing  system  carried  out.  The  attempt  to  tax 
this  generation  for  the  purpose  of  at  once  pay¬ 
ing  off  a  great  debt,  incurred  to  secure  per¬ 
manent  liberty  and  peace,  having  been  defi¬ 
nitely  abandoned,  the  people  would  at  once 
enter  upon  what  is  the  normal  and  present 
duty,  the  development  of  means  wherewith  to 
pay  the  debt  when  it  shall  mature,  and  the  crea¬ 
tion  of  such  mean3  as  will  enable  the  Treasury 
to  cancel  from  time  to  time  such  portions  of  the 
consols  as  it  can  buy  in  the  market. 

INDUSTRIAL  INTERESTS  VS.  BANKERS  AND  BROKERS. 

It  is  time  that  the  attention  of  Congress  and 
of  the  Administration  was  given  to  the  promo¬ 
tion  of  the  financial  and  industrial  interests  of 
the  whole  people,  rather  than  of  that  portion 
which,  patriotic  as  it  may  esteem  itself  to  be, 
is  none  the  less  only  the  non-producing  class. 
There  are  other  interests  in  the  land  besides 
those  of  bankers,  bondholders,  brokers,  and 
money-changers.  It  is  Dickens  who  tells  us 
of  an  English  woman  riding  through  the  streets 
of  London  on  the  top  of  a  stage  coach  for  the 
first  time,  who  was  attracted  by  nothing  but  the 
narrow  windows  of  the  houses.  She  proved  to 
be  the  daughter  of  a  builder.  The  same  anal¬ 
ogy  applies  to  the  policy  of  Mr.  Secretary 
McCulloch.  He  was  doubtless  an  ornament  to 
the  banking  business,  but  as  Secretary  of  the 
Treasury,  unfortunately  for  the  country,  he  can 
be  nothing  else  but  a  banker.  The  trading  and 
banking  interests  have  had  more  than  their  due 
showing,  and  it  is  time,  if  ruin  is  not  courted, 
that  the  manufacturing  and  producing  interests 
should  be  relieved  and  fostered.  It  has  been 
my  endeavor  to  show  that  this  can  be  done,  in 
great  part,  by  means  of  a»  abundant  and  uni¬ 
form  currency,  to  be  gained  by  the  issues  of 
national  notes,  or  if  the  present  banking  sys¬ 
tem  is  too  strongto  be  abolished,  as  it  ought  to 
be,  then,  by  making  it  a  free  system,  allowing 
all  to  participate  in  it  who  choose  to  obey  the 
law’s  requirements.  They  must  be  made,  in 
fact,  to  pay  the  Government  for  the  privileges 
they  enjoy  and  the  profits  they  make,  instead, 
as  is  now  the  case,  making  the  Government 
pay  them. 

PRINCIPLES  OF  TAXATION. 

But  there  is  another  and  crying  necessity, 
that  is,  to  relieve  the  producing  and  industrial 
interest  of  its  present  and  intolerable  burden 
of  taxation.  The  all-important  consideration 
in  the  framing  of  a  revenue  law  should  be  the 
raising  the  greatest  amount  with  the  least  pos¬ 
sible  injury  to  the  producing  class.  To  keep 
their  interests  in  view  should  be  the  duty  of 
legislation.  The  defect  of  the  present  system 
is,  that  it  is  based  upon  the  upholding  of  the 
non-producers.  In  view  of  all  that  has  been 
j  done  and  said  on  this  subject,  a  statement  of 
!  some  simple  but  common-sense  rules  which 
!  should  regulate  internal  revenue  systems  seem 


6 


not  to  be  out  of  place.  Certainly  a  radical 
change  is  demanded.  Congress  must  make  it: 

1.  The  burdens  of  taxation  must,  as  before 
said,  be  imposed  as  lightly  as  possibleon  produc¬ 
tion  and  its  processes.  Tax  the  least  we  can 
and  it  is  sure  to  be  more  or  less  oppressive. 
We  cannot  devise  a  revenue  system  which  will 
not  operate  unequally  in  the  collection  and  dis¬ 
bursement  of  its  proceeds. 

2.  Taxation  should  principally  be  imposed 
upon  accumulated  wealth  and  not  upon  em¬ 
ployments.  An  income  tax  is  the  most  bur¬ 
densome  method  of  all.  Continued  in  its 
present  shape  it  would  eat  up  all  industries. 
Let  us,  then,  tax  accumulations,  not  incomes. 
Articles  of  luxury  and  indulgence,  not  of  neces¬ 
sity,  should  be  made  to  bear  the  chief  propor¬ 
tion  of  t  he  revenue  required.  The  tax  on  such 
articles  is  more  easily  collected,  or  should  be, 
if  the  appointees  of  the  Administration  could 
be  controlled. 

3.  As  little  of  the  accumulated  wealth  as 
possible  should  be  exempted  from  taxation  for 
State  and  municipal  purposes.  The  present 
system  of  bond  exemption  is  ruinous  to  all 
industries.  One  of  two  things  must  be  done, 
or  both,  if  possible.  Tax  your  bonds  or  fund 
them,  reducing  the  rate  of  interest  so  low  as  to 
keep  most  active  capital  afloat  in  business  en¬ 
terprises  and  not  locked  up  in  these  securities. 
Under  our  system  a  manufacturer  or  mechanic 
bears  double  share  of  taxation.  Continue  the 
present  mode  and  it  is  fair  to  presume  that  the 
bondholders  will  in  time  absorb  all  the  accu¬ 
mulated  wealth  of  the  nation,  and  the  indus¬ 
trious  class  will  have  leave  only  to  bear  its 
burdens.  Such  a  system  will  not  long  be  tol¬ 
erated.  It  is  our  duty  to  see  this  and  to  provide 
for  an  equitable  readjustment. 

A  FINANCIAL  POLICY  PROPOSED. 

Mr.  Speaker,  I  shall  first  endeavor  to  secure 
by  my  vote  such  readjustment  of  the  present 
national  debt  as  will  place  it  in  the  form  of  a 
forty  or  fifty  year  bond,  bearing  not  a  higher 
rate  of  interest  than  three-sixty-five  per  cent, 
or  a  cent  per  day  on  each  hundred  dollars. 

Second.  I  shall  vote  for  such  measures  as,  in 
my  judgment,  will  secure  to  the  country  a  large 
volume  of  money.  To  accomplish  this  I  would 
favor  the  payment  at  the  end  of  the  five  years 
at  which  the  Government  has  the  optional 
right  of  redemption  of  at  least  one  half  of  the 
five-twenty  bonds  in  “legal  tender”  or  Treas¬ 
ury  notes,  to  be  made  “a  lawful  money”  and 
receivable  in  payment  of  all  debts. 

I  would  vote  at  this  time  for  the  immediate 
issue  of  “greenbacks”  equal  in  value  “to 
the  remaining  matured  and  maturing  debt 
which  is  payable,  principal  and  interest,  in 
Treasury  notes,  and  so  prevent  the  conversion 
of  them  into  gold-bearing  bonds  as  the  Treas¬ 
ury  is  now  actively  doing. 

Third.  The  repeal  of  the  national  banking 
law,  if  proposed,  will  secure  my  vote. 

Failing  in  that  1  shall  certainly  vote  to  re¬ 
move  all  restrictions,  and  allow  banks  to  be  1 


set  in  motion  wherever  the  people  want  them, 
requiring,  of  course,  proper  safe-guards.  All 
measures  which  will  make  the  banks  pay  the 
Government  for  the  privilege  of  getting  rich, 
instead  of  as  now  having  the  Government  pay 
the  banks,  will  receive  my  hearty  support. 

DECREASE  NATIONAL  BURDENS  BY  DEVELOPING  NA¬ 
TIONAL  RESOURCES. 

In  addition  to  lessening  the  burdens  of  the 
people,  opening  all  business,  and  renewing 
activities  by  affording  a  stable  yet  flexible  and 
abundant  currency,  it  will  be  my  duty  to  urge 
upon  this  floor  all  measures  which  tend  to  aid 
internal  improvements,  thus  stimulating  devel¬ 
opment,  and  by  its  rapidity  creating  within  so 
short  a  period  as  to  be  almost  fabulous  such 
an  abundant  wealth  as  will  lift  the  great  bur¬ 
dens  of  taxation  and  debt  from  the  shoulders  of 
even  this  generation.  It  is  not  in  accordance 
with  my  convictions  nor  consistent  with  the 
duty  I  owe  to  my  constituency  for  me  to  sus¬ 
tain  the  false  idea  of  economy  which  seems  to 
prevail  with  some  gentlemen  on  this  floor. 
Governments  are  not  so  much  machines  for 
saving  money  as  for  seeing  that  it  is  wisely  ex¬ 
pended. 

The  undeveloped  wealth  of  the  West,  its 
great  and  fertile  soil,  from  which  many  mil¬ 
lions  are  to  be  sustained,  and  still  more  its 
immense  mineral  resources,  only  wailing  the 
miner’s  skill,  capital,  and  enterprise  to  wrench 
from  the  granite — these  are  alone  sufficient,  if 
the  proper  impetus  be  given,  to  pay  the  great 
debt  the  war  piled  up.  In  addition  to  the 
course  before  indicated  it  would  seem  to  be 
the  part  of  wisdom  to  aid  the  grand  material 
progress  of  the  land,  so  that  the  further  shores 
of  the  continent  may  be  bound  in  the  indis¬ 
soluble  links  of  interest  as  well  as  consan¬ 
guinity. 

OUR  CONTINENTAL  RAILROAD  SYSTEM. 

Mr.  Speaker,  any  scheme  looking  to  the  final 
and  even  speedy  payment  of  the  debt  and  of  the 
equitable  adjustment  of  the  burdens  it  imposes 
must  wisely  aid,  by  loaning  the  Government 
credit,  the  building  of  our  great  continental  or 
Pacific  railroads. 

We  want  the  Union  Pacific  completed  at  the 
earliest  moment.  We  need  and  must  have 
additional  legislation  by  which  the  great  cen¬ 
tral  route,  the  Union  Pacific,  eastern  division, 
may  be  authorized  to  continue  its  way  westward 
along  its  present  direct  and  axial  line,  opening 
and  building  up  all  that  amazingly  rich  region 
of"  southern  Colorado,  New  Mexico,  Arizona, 
Nevada,  and  sout  hern  California  until  it  reaches 
the  Pacific  coast. 

In  addition  to  these,  any  comprehensive 
scheme,  which  looks  to  the  readjustment  of  our 
national  burdens  and  the  equitable  aiding  of  our 
internal  development,  must  take  into  consider¬ 
ation  the  erection  of  two  other  great  roads  to 
the  Pacific  ;  the  one  passing  through  the  North¬ 
west  Territory  and  the  other  opening  up  and 
passing  through  the  Southwest,  draining  Ark¬ 
ansas,  Louisiana,  and  Texas,  by  the  valley  of 


7 


the  Gila  river,  through  southern  New  Mexico 
ami  Arizona,  and  crossing  the  Rio  Colorado  to 
reach  the  Pacific  at  or  near  San  Diego,  Califor¬ 
nia.  This  last  continental  route,  in  conjunc¬ 
tion  with  one  already  projected  in  my  own  State, 
would  undoubtedly  form  the  main  artery  of  the 
Southwest;  and  by  the  aid  of  thorough  south¬ 
ern  railroad  systemsand  of  those  great  railroads 
which  will  finally  develop  the  vast  resources  of 
Mexico,  it  will  undoubtedly  drain  the  wonder¬ 
fully  rich  silver  regions  of  Chihuahua,  Sonora, 
aud  Durango,  and  by  a  great  feeder  terminating 
at  Guayamas,  on  the  Gulf  of  California,  make 
all  northern  and  central  Mexico  our  tributary. 

The  Northern  Pacific  road  would  make  trib¬ 
utary  the  British  provinces  on  the  Pacific  coast. 
It  would  open  that  immense  grain  region  lying 
east  of  the  Rocky  mountains  known  as  the 
Valley  of  Saskatchewan  or  Red  River  of  the 
North.  Dakota  would  quickly  become  a  State  ; 
Minnesota  would  prosper  largely  ;  while  the 
mineral  wealth  of  Idaho  and  Montana  would 
startle  t  he  picayune  economists  by  its  magnitude. 

Besides  thus  lending  our  credit  to  the  devel¬ 
opment  of  our  great  territory  to  the  west  of 
the  Missouri  and  Mississippi  rivers,  I  shall  urge 
that  aid  be  granted  to  that  other  system  of 
roads  already  empowered,  the  initial  point  of 
which  is  in  my  own  State,  but  which  must  ulti¬ 
mately  open  the  southwestern  sea-board  to  the 
use  of  the  farmers  of  ihe  great  interior  plains. 
I  refer  now  to  that  North  and  South  system 
whose  objective  point  is  Galveston,  on  the  Gulf 
of  Mexico.  The  great  plains  stretching  from 
the  Rio  Brazos,  in  Texas,  to  beyond  the  North 
Platte,  in  Nebraska,  need  a  route  by  which  to 
reach  the  sea-board  within  a  shorter  distance 
than  they  can  either  to  the  East  or  West. 
Only  railroads  can  develop  and  populate  these 
great  interiors.  With  this  rapid  means  of 
reaching  the  sea-board,  and  the  securement 
thereby  of  a  market  for  their  grain,  wool,  and 
other  staples,  they  will  quickly  repay  all  it  may 
cost  to  aid  them  in  creating  their  prosperity. 


AID  FOE  A  LOYAL  SOUTH. 

The  South  will  need  aid.  Internal  develop¬ 
ment  on  a  grand  scale  is  the  primal  necessity 
of  our  continental  position.  There  can  be  no 
sectional  policy  adopted,  least  of  all  by  the 
party  which  so  far  has  preeminently  repre¬ 
sented  the  nation. 

Sir,  I  shall  favor  at  the  proper  time,  as  part 
of  this  general  policy,  the  extension  of  Govern¬ 
ment  aid,  in  the  form  of  credit  or  otherwise, 
lor  securing  the  rebuilding  of  the  Mississippi 
levees,  so  that  the  vast  and  fertile  region  now 
subject  to  overflow  may  again  be  made  of  value 
to  the  nation  by  the  abundant  harvests  of  cot¬ 
ton,  sugar,  and  other  crops  it  can  produce. 
When  the  southern  States  are  represented  here 
by  loyal  men,  when  their  home  affairs  are  ad¬ 
ministered  by  loyal  officers,  which  will  soon 
come  to  pass,  I  shall  favor  a  generous  policy 
toward  them  in  the  matter  of  land  grants  for 
railroads  or  other  reasonable  purposes. 

WHAT  WE  MAY  HOPE — CONCLUSION. 

Sir,  with  economy  in  expenditures,  justice  in 
taxation,  an  abundant  and  equable  volume  of 
money,  adjusting  itself  easily  to  the  needs  of 
the  country  ;  with  the  burden  of  the  national 
debt  laid  more  equally  on  the  future  as  well  as 
the  present;  and  above  all,  with  a  generous 
and  wisely  comprehensive  policy  and  system 
of  internal  improvement,  may  we  not  ffirly 
hope  to  enter  upon  an  unexampled  and  won¬ 
derful  career  of  national  prosperity?  With 
equality  before  the  law;  with  no  slave  and  no 
caste  in  the  land  :  with  both  oceans  and  the  gulf 
and  lakes  linked  together,  bringing  to  our  midst 
the  wealth  of  the  world;  and  with  a  hearty 
welcome  and  full  protection  to  all  who  come 
to  us,  and  prosperity  to  all  who  labor  honestly; 
with  education  as  abundant  as  bread,  and  an 
open  field  for  all  worthy  ambitions,  may  we 
not,  looking  into  the  near  future,  see  soon  and 
surely  the  great  American  Republic  standing 
august  and  honored  as  no  other  land  has  ever 
been  among  the  nations  of  the  earth? 


Printed  at  the  Congressional  Globo  Office. 


i 


